The government is "nowhere near" meeting its SME spending targets, according to Zoe Cunningham, managing director of software company Softwire.
The government has an 'aspiration' for SMEs to gain 25 percent of Whitehall spending. It updated this in August 2013, saying it aims for 'at least' 50 percent of spending on new government IT to go to SMEs.
However, at a roundtable on Labour's digital government review hosted by TechUK, representatives from technology SMEs warned that the government has not changed buyer behaviour enough to help them win more public sector work.
Cunningham said: "The government is not backing up the 25 percent target with engagement with SMEs. We haven't seen much progress with it. And they are being very overambitious with the 50 percent target.
"We're nowhere near it. SMEs are being put off bidding for government work, and they are not being listened to. It's still much easier for us to work with private businesses than government."
SMEs gained 20 percent of central government spending in 2012/13, although just 9.4 percent of that represents direct spending with SMEs themselves.
Cunningham's comments were made at meeting which was attended by shadow minister Chi Onwurah MP and over 20 representatives from SMEs who work with the public sector. The event was held under Chatham House rules. However, Cunningham and Unilink CEO Francis Toye waived their anonymity.
The majority of the government's spending with SMEs is channelled through larger suppliers and 'prime contractors'. This emerged as a contentious issue during the meeting, with one saying that they found it a "nightmare" being partnered with a systems integrator (SI).
He said: "The difference in mindset between SMEs and SIs is often too great. The strategy of partnering SMEs with SIs is mad. It won't work. They are too different."
One of the representatives said that their company can usually deploy within 10 to 20 days, but being partnered with an SI for a government contract slowed this down to nine months.
Another said that the strategy won't work as the commercial interests of SIs and SMEs are often in "direct conflict", for example, over pricing.
A chief executive added: "SMEs would much rather work with government directly. Going through an SI means we have to teach the SI what we do, who then has to teach the department. It doesn't make sense and delays the process hugely."
Onwurah said: "SMEs must feel triumphed by the government yet betrayed at the same time. The focus is on them, there's the 25 percent 'aspiration'. So there's a lot of talk about engaging SMEs, and yet we don't seem to get there.
"We want to identify the barriers and have policies in place to overcome them as much as possible. The genuine contribution of SMEs can't be overvalued. They offer innovation and value for money."
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